In October 2023, during the inauguration of the 3 de Febrero Hydroelectric Plant, President Nayib Bukele offered an unusually transparent look into the negotiations between El Salvador and the International Monetary Fund (IMF). His remarks confirmed that the IMF had brought two notable demands to the table:
- That El Salvador increase its Value Added Tax (VAT)
- That the country revisit the legal-tender status of Bitcoin
These points had not been officially disclosed prior to that public event.
Below is the translated exchange that revealed these details.
Journalist’s Question (Translated to English)
“Good afternoon, President. I wanted to ask whether you foresee El Salvador reaching an agreement with the International Monetary Fund soon, and whether the discussion about the validity of Bitcoin as legal tender is a point of contention in the negotiations.”
President Nayib Bukele’s Response (Translated to English)
“Yes, well, we remain in conversations with them. I understand there was a meeting about a week ago or so; I also understand that the IMF’s spokesperson said that the meetings had been positive and that they saw a movement toward an agreement.
I personally said the same thing—even to some investors, to some investment banks in the United States during my visit to the United Nations—that we are going to work and do everything possible to reach an agreement as quickly as we can.
I understand that nothing is written in stone; obviously, they have their demands and we have our counter-proposals. For example, they wanted us to raise the VAT. We said that was off the table—that we were not going to raise the VAT. So there are normal discussions in a negotiation, and that’s why it’s called a negotiation. At the end of the negotiation, God willing, we will reach an agreement.
I would expect that agreement to be reached after the elections. I imagine they won’t want to announce anything before the elections. But, to repeat what the IMF’s spokesperson said: there have been very productive conversations, and we hope that there will be an agreement in the future, if we are able—redundantly—to reach consensus on those small points where we are willing to work things out, and I understand that they…”
Bitcoin as Part of the IMF’s Demands
In addition to the VAT issue, Bukele also made clear that the IMF had concerns over Bitcoin being legal tender.
During the negotiation process, one of the practical agreements reached was that El Salvador would no longer require businesses to accept Bitcoin mandatorily. Instead, Bitcoin acceptance became voluntary, which addressed a major IMF objection without eliminating Bitcoin from the Salvadoran financial ecosystem.
This adjustment aligned with the IMF’s request, yet it preserved the core of the Bitcoin Law: Bitcoin remains legal tender in El Salvador.
El Salvador Did Not Abandon Bitcoin — Quite the Opposite
Despite easing the obligation for merchants, El Salvador continued to strengthen its Bitcoin strategy. Two years after the 2023 negotiations:
- The nation’s Bitcoin reserves have continued to grow, month after month.
- Only this month, according to public tracking sources, the national holdings increased by more than 1,000 additional bitcoins.
This demonstrates that El Salvador did not step back from Bitcoin as a national asset; instead, it shifted the implementation model to satisfy negotiation pressures while continuing to accumulate BTC at the state level.
Conclusion
The 2023 disclosure by President Bukele confirmed what many had speculated: the IMF’s negotiation package included a request to raise VAT and concerns over Bitcoin’s legal tender status.
El Salvador rejected the VAT demand outright, but found a middle ground on Bitcoin by making its acceptance voluntary rather than mandatory.
Far from abandoning its crypto strategy, the country has doubled down, expanding its Bitcoin reserves significantly in the following two years.
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